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No people overheads % has been included in the NEC3 ECC Option A contract. The space where this is to be entered in the Contract Data part 2 was left blank. Can the party whom drafted the contract dispute the other party who now want it included post contract? i.e. if it is left blank, is it a given that this means that no people overheads percentage applies? or is the party whom drafted the contract bound contractually to agree a people overheads % post contract and have this included? or can it be disputed contractually?

Also, if the party whom wants the % now included has raised the issue under clause 17.1 as an inconsistency, is this viable and what options are there available to close out the issue?

2 Answers

+1 vote

You are correct to think this should be resolved under clause 17.1 as an ambiguity or inconsistency. The PM should give an instruction to resolve it based on his interpretation of what a reasonable person with all the background knowledge available to the parties would attribute to it. The PM should take into account all information available in connection with the project e.g. procurement documentation, pre contract letters and emails etc, and possibly even the Contractor's tender build-up in order to ascertain the correct interpretation of the contract.

If it was me, unless there was positive evidence to suggest that the blank space was an error and intended to be 0%, I would accept that it is reasonable to assume the blank space was an error or mistake and intended to be some% as in my experience it always is. Then I'd resolve this with a good healthy dose of clause 10.1 to agree what the something should be. If the PM decides it should be 0% then I would expect the Contractor claim that the instruction stating this is a breach of contract by the PM and dispute it which is surely not the right outcome for the project.

Neil has answered this very well. More fundamentally you would have to question how either party allowed this to happen in the first place. One of them should have picked up on this before the contract was signed. Everything in contract data should be filled in or struck through/deleted if it is not used or not relevant.